Jul. 12 – The State Duma may approve additional restrictions on the sale of beer with alcohol content of more than 0.5 percent between 11 p.m. and 8 a.m. in the country before the summer recess. The bill would also ban the sale of beer altogether at outdoor kiosks (stalls), train stations and street stands, at which around one-third, or about US$6 billion of Russia’s beer is sold.
The bill also expands the number of places where alcohol consumption is prohibited. These places will now include courtyards, elevators, building entryways, playgrounds, forests, parks and beaches. The law is expected to fully enter into force by January 1, 2013, but it is already causing shock waves in the industry.
Shares in Danish brewer Carlsberg slid to a near four-month low over 4.2 percent last Wednesday on concerns that Russia, its largest single market, would pass the law. Carlsberg owns the best-selling Baltika brand and has an overall 40 percent share of the Russian market. The Russian market grew about 1 percent in the first quarter of this year and Carlsberg said last month it expected the market to grow by between 3 percent and 5 percent in the medium term as the economy recovers.
Reporting first-quarter results in May, Carlsberg said a recovery in eastern European demand helped drive a 38 percent rise in profits.
“Of course it will have an effect on Carlsberg, but it is difficult to estimate how big,” Alm. Brand analyst Stig Nymann said to Reuters. “This sounds worse than what we have been presented with before.”
Experts said it is unlikely that the restrictions will have an impact on alcohol consumption because people will simply buy the products earlier or illegally.
“This bill won’t reduce alcoholism in the average citizen, but it won’t harm the consumer and the producer either,” Vadim Drobiz, director of the Research Center for Federal and Regional Alcohol Markets said to The Moscow Times. “Nighttime crime will be reduced as well as nighttime hooliganism.”
Current laws punish drinking in restricted areas with a fine of US$3.57 to US$28, while being drunk in these areas can lead to a prison stay of up to 15 days, Vedomosti reported. Some industry representatives welcomed the restrictions.
“Kiosks are a humiliating presence for a large city such as Moscow,” said Alexander Romanov, general director of the Alcohol Manufacturers Committee. “Kiosks that sell alcohol should not exist.”
“None of these kiosks have up-to-date permits for making sales if they ever had them,” he said.
But other industry representatives fear that the ban on alcohol sales will make kiosks unprofitable and will force them to close. Alcohol sales account for almost half of the profits for kiosks, SABMiller’s Kirill Bolmatov told Vedomosti.
He said the ban on beer consumption in public places may hit sales volume significantly in the short term, but added the company understood the logic behind the decision.
“We support the ban of beer sales at night, especially as we have been granted a grace period,” said Kirill Bolmatov. “The volume sold through kiosks will be redistributed and sold in supermarkets, restaurants, bars and cafes.”
“I believe it will have a short-lasting effect. We understand how drinking beer in the streets irritates people, therefore we do not complain,” he said.